Final Results

RNS Number : 6625S

TMT Investments PLC

21 March 2016

 

21 March 2016

TMT INVESTMENTS PLC

("TMT" or the "Company")

Final results for the year ended 31 December 2015

TMT Investments PLC, which invests in high-growth, internet-based companies across a variety of sectors, is pleased to announce its final results for the year ended 31 December 2015.

·    NAV per share of US$1.91 (up 40% from US$1.36 as of 31 December 2014)

·    1 full (Tracks) and 1 partial (Pipedrive) cash exit

·  10 positive revaluations, including significant uplifts in values of our portfolio stars Backblaze, Depositphotos, LeTote, Pipedrive, Virool, and Wrike

·    2 write-downs (Unicell and Appsindep)

·    US$1.43 million allocated to new and follow-on investments (Depositphotos, ScentBird, and Weaved)

·   Diversified portfolio of 31 companies focused around mobile software applications, cloud solutions, social discovery shopping, and business SaaS tools

·    Many portfolio companies continue to experience rapid growth

Alexander Selegenev, Executive Director of TMT, commented:

"2015 was our fifth full year as a publicly traded company.  As reported in our 2014 Annual Report, given the rapid growth experienced by a significant number of our portfolio companies, we expected 2015 to produce a number of positive revaluations across our portfolio.  We are delighted that this is exactly what happened: our NAV per share as of 31 December 2015 increased by 40% to US$1.91, despite two sizable write-downs.  It is especially pleasing to see that a number of companies in which we invested at an earlier stage have attracted the attention of large, blue-chip investment groups at higher valuations in order to fund their continued growth.

We continue to see exciting investment opportunities in our chosen sectors and look forward to updating our shareholders on the Company's progress in the near future."

The Annual Report and Accounts for the year ended 31 December 2015 are available on the Company's website at www.tmtinvestments.com, where an electronic copy can be accessed.

For further information contact:

TMT Investments Plc Alexander Selegenev www.tmtinvestments.com	[phone] [e-mail]
ZAI Corporate Finance Ltd. NOMAD Richard Morrison/ Peter Trevelyan-Clark/ Irina Lomova	[phone]
Hybridan LLP Broker Claire Louise Noyce	[phone]
Kinlan Communications David Hothersall	Tel. [phone] [e-mail]

EXECUTIVE DIRECTOR'S STATEMENT

2015 has been a successful year for the Company, with a big number of sizable revaluations across our portfolio.  As a result, our NAV per share as of 31 December 2015 increased significantly to US$1.91 (up 40% from US$1.36 as of 31 December 2014).  Importantly, this result takes into account two sizable impairments that were not triggered by any actual independent transactions, but which the management considered appropriate to recognise at this stage.  TMT has now invested in 39 companies since its flotation in December 2010 and has a diversified portfolio of 31 investees focused primarily on mobile software applications, cloud solutions, social discovery shopping, and business SaaS tools.

Portfolio Performance

For the last few years we have noted the biggest "reporting challenge" faced by the Company, which is in the business of investing in earlier-stage, privately held companies that typically do not have a sufficiently long history of earnings.  This means that, regardless of how impressively some of our portfolio companies may have grown in terms of revenue and operating metrics, positive changes in fair value of our portfolio companies cannot be justified under the IFRS rules unless there has been an independent equity financing round or other measurable reliable evidence to support a change in the valuation.  On the other hand, any write-offs or impairments are recorded immediately as negative revenue on the Company's Profit and Loss Account.  2015 was an important year for the Company, as we were delighted to see a large number of significant positive portfolio revaluations among our portfolio companies.  It is especially pleasing to see that a number of companies in which we invested at an earlier stage are now attracting the attention of large, blue chip investment groups at higher valuations to support their continued growth.

The following developments took place within the Company's portfolio in 2015:

Cash and part-cash exits:

·    In September 2015, the Company's portfolio company Kanvas Labs, Inc. ("Kanvas") was acquired by AOL, Inc.  TMT's total maximum potential consideration for the transaction (including amounts in escrow) is US$797,529, representing a premium of approximately US$247,000 (or 45%) to the value of TMT's original investment in Kanvas made in November 2011 and March 2013, or an internal rate of return ("IRR") of up to 11%.

·    In November 2015, the Company sold a small part of its equity stake in Pipedrive, Inc. ("Pipedrive"), a SaaS-based sales CRM software provider, for US$249,490 in cash. (Please see further details of this transaction in the "Positive non-cash revaluations" section below.)

Positive non-cash revaluations:

·   In February 2015, Drippler, a mobile tech discovery media service, completed a sizable equity financing round.  The transaction represents an uplift of approximately US$97,000 (or 48%) in the fair value of TMT's investment in Drippler, compared to the amount announced as of 30 June 2014.

·    In April 2015, Wrike, a SaaS-based work management platform, completed a US$15 million equity financing round.  The transaction represents an approximately US$2.3 million (or 116%) uplift in the fair value of TMT's investment in Wrike, compared to the latest reported amount reported as of 31 December 2014.

·    In April 2015, Pipedrive, a SaaS-based sales CRM software provider, completed a US$9 million equity financing round led by Bessemer Venture Partners.  The transaction represents an approximately US$1.82 million (or 235%) uplift in the fair value of TMT's investment in Pipedrive, compared to the latest reported amount as of 31 December 2014.

·   In May 2015, farm management software provider VitalFields completed a new equity financing round.  The transaction represents an uplift of approximately US$36,000 (or 27%) in the fair value of TMT's investment in VitalFields, compared to the latest reported amount as of 31 December 2014.

·   In June 2015, PandaDoc, a SaaS-based sales management tool, completed a US$5 million equity financing round.  The transaction represents an uplift of approximately US$90,000 (or 22%) in the fair value of TMT's investment in PandaDoc, compared to the latest reported amount as of 31 December 2014.

·   In September 2015, Drupe, a mobile app that brings all your contacts and communication apps together in one place, completed an equity financing round.  The transaction represents an uplift of approximately US$0.3 million (or 132%) in the fair value of TMT's investment in Drupe, compared to the latest reported amount as of 31 December 2014.

·    In October 2015, Virool, a native video advertising platform, completed a sizable equity financing round.  The transaction represents an approximately US$1.31 million (or 161%) uplift in the fair value of TMT's investment in Virool, compared to the latest reported amount as of 31 December 2014.

·    In November 2015, the Company sold a small part of its equity stake in Pipedrive, Inc. ("Pipedrive"), a SaaS-based sales CRM software provider.  The transaction represents a further US$751,212 (or 29%) uplift in the fair value of TMT's investment in Pipedrive, compared to the amount announced as of 30 June 2015.  TMT's cash consideration received pursuant to the transaction is US$249,490.  The Company's remaining equity stake in Pipedrive is worth approximately US$3.1m, which represents a further US$0.5m uplift compared to the previous valuation announced as of 30 June 2015.

·    In December 2015, LeTote, a Netflix-style fashion rental platform, completed a US$15 million equity financing round.  The transaction represents an uplift of approximately US$0.62 million (or 137%) in the fair value of TMT's investment in LeTote, compared to the latest reported amount as of 31 December 2014.

·     In December 2015, Depositphotos, a stock photo marketplace, completed a US$5 million equity financing round, led by the venture capital arm of the European Bank for Reconstruction and Development ("EBRD").  The transaction represents an uplift of approximately US$8.12 million (or 163%) in the fair value of TMT's investment in Depositphotos, compared to the latest reported amount as of 31 December 2014.

·    Based on the results of an independent valuation report commissioned by Backblaze, Inc. ("Backblaze"), the fair value of TMT's equity stake in Backblaze has increased by approximately US$3.4 million (or 55%), compared to the amount reported as of 31 December 2014.

Impairments and write-offs:

·    The Board of TMT considers it prudent to incur an impairment charge equal to US$1,527,383, or 51.2% of the fair value of the Company's investment in Unicell.  Unicell's traditional business has reduced significantly in the last two years, and the company is quite leveraged.  On the other hand, Unicell's 50% equity stake in Pango, a successful and fast-growing parking payment operator in Israel, has become more valuable.  The combined valuation produces the fair value of TMT's stake in Unicell of US$1,455,088, compared to US$2,982,471 reported as of 31 December 2014.

·   Online games developer AppsIndep, in which TMT invested in 2012, has experienced difficulties in gaining satisfactory traction for games launched in the last two years.  Accordingly, the Board of TMT considers it prudent to incur an impairment charge equal to US$1,397,764, or 75% of the fair value of the Company's investment in AppsIndep reported as of 31 December 2014.

Key developments for the 10 largest portfolio holdings in 2015 (compared to 2014; source: TMT's portfolio companies)

Depositphotos (photobank):

·     Revenues up 21%

·     Total number of files in the photobank up 45%

·     $5m new equity raised, with EBRD leading the round

Backblaze (online data backup and cloud storage provider):

·     Revenues up 25%

·     Total number of licensed computers up 30%

·     Launched "B2": a new low-cost commercial cloud storage product (direct competitor of Amazon's S3).

Wanelo (online social shopping platform):

·     Revenues up 311%

·     Total subscribers up 19%

·     Over 550,000 stores and 30 million products on the platform

Wrike (work management and collaboration software):

·     Revenues up 131%

·     Total number of paid accounts up 55%

·     $15m new equity raised from Scale Venture Partners

Pipedrive (sales CRM software):

·     Revenues up 116%

·     Total paying customers up 84%

·     $9m new equity raised from Bessemer Ventures

Adinch (online advertising platform):

·     Revenues up 24%

·     Russian part of the business negatively affected by the financial crisis

Virool (native video advertising platform):

·     Sizable new equity round completed

·     Significant growth in new clients and revenues

Unicell (provider of digital marketing solutions and mobile applications and services):

·     Traditional business is not growing

·     Generally breakeven, but quite leveraged

·     50%-owned Pango, a parking payment operator in Israel, is fast-growing and successfully developing

LeTote (Netflix-style fashion rental platform):

·     Revenues up more than 400%

·     $15m new equity raised

Anews (news reading app):

·     Total app downloads up 33% to over 3.5m

·     Revenues up 56%

New investments

In 2015 the Company invested US$400,000 in fragrance subscription service ScentBird, as well as made additional investments in two existing portfolio companies (US$1,000,000 in Depositphotos and US$27,000 in Weaved).

NAV per share

The Company's net asset value per share as of 31 December 2015 increased to US$1.91 (31 December 2014: US$1.36).

Operating Expenses

In 2015, the Company's Administrative Expenses of US$997,705 were notably below the 2014 levels (US$1,382,874).  This is generally attributed to the Company's less intensive investment activities in 2015.  Total Operating Expenses also decreased in the reporting period due to the lower share-based option charge of US$45,028 (2014: US$166,282).  This is a non-cash item resulting from the Company's share option program adopted in October 2012.

Financial position

As of 31 December 2015, the Company had US$1.16 million in cash reserves.  As of the date of this report, the Company has no debt and approximately US$0.95 million in cash reserves.

Events after the reporting period

There were no material events subsequent to the end of the reporting period.

Amendment to the Investing Policy

We propose to seek shareholder consent to amend the Company's existing Investing Policy by replacing the intention to acquire blocking stakes in private companies.  Whilst the acquisition of lower than blocking stakes is permitted, the Investing Policy stated that this would be done "where it (the Company) sees ways to increase the stakes to blocking or controlling stakes at a later date."  At the current time, this may not be feasible or desirable, and so shareholders will be asked to approve the following amendment to the existing Investing Policy:

Private Companies

The Company will target small and mid-sized companies and will seek to secure at least significant blocking stakes and board representation, where it considers that the Company and/or an investee company would benefit from such an appointment. The Company will consider making equity investments in lower than blocking stakes only where it sees ways to increase the stakes to blocking or controlling stakes at a later date…

The remainder of the Investing Policy remains unchanged.

Outlook

2015 was our fifth full year as a publicly traded company.  As reported in our 2014 Annual Report, given the rapid growth experienced by a significant number of our portfolio companies, we expected 2015 to produce a number of positive revaluations across our portfolio.  We are delighted that this is exactly what happened: our NAV per share as of 31 December 2015 increased by 40% to US$1.91, despite two sizable write-downs.  It is especially pleasing to see that a number of companies in which we invested at an earlier stage have attracted the attention of large, blue-chip investment groups at higher valuations in order to fund their continued growth.

We continue to see exciting investment opportunities in our chosen sectors and look forward to updating our shareholders on the Company's progress in the near future.

Alexander Selegenev

Executive Director

Statement of Comprehensive Income

		For the year ended 31/12/2015		For the year ended 31/12/2014
	Notes	USD		USD
Losses on investments	3	(2,215,983)		(23,911)
		(2,215,983)		(23,911)
Expenses Share-based payment charge	15	(45,028)		(166,282)
Administrative expenses	5	(997,705)		(1,382,874)
Operating loss		(3,258,716)		(1,573,067)
Net finance income	7	7,964		11,079
Loss before taxation		(3,250,752)		(1,561,988)
Taxation	8	-		-
Loss attributable to equity shareholders		(3,250,752)		(1,561,988)
Other comprehensive income for the year:
Change in fair value of available-for-sale financial assets	16	18,505,974		2,171,251
Total comprehensive income for the year		15,255,222		609,263
Loss per share
Basic and diluted loss per share (cents per share)	9	(11.75)		(5.96)

Statement of Financial Position

		At 31 December 2015 USD			At 31 December 2014 USD
	Notes
Non-current assets
Investments in equity shares	10	49,483,857				31,854,151
Convertible loan notes receivable	10	2,202,649				3,091,702
Total non-current assets		51,686,506				34,945,853
Current assets
Trade and other receivables	11	178,640				159,784
Cash and cash equivalents	12	1,159,789				2,639,070
Total current assets		1,338,429				2,798,854
Total assets		53,024,935				37,744,707
Current liabilities
Trade and other payables	13	39,377				59,399
Total liabilities		39,377				59,399
Net assets		52,985,558				37,685,308
Equity
Share capital	14	31,453,510				31,453,510
Share-based payment reserve	16	165,454				392,659
Fair value reserve	16	28,614,592				10,108,618
Retained losses	16	(7,247,998)				(4,269,479)
Total equity		52,985,558				37,685,308

Statement of Cash Flows

		For the year ended 31/12/2015	For the year ended 31/12/2014
		USD	USD
	Notes
Operating activities
Operating loss		(3,258,716)	(1,573,067)
Adjustments for non-cash items:
Profit on disposal of available-for-sale assets	3	(645,387)	(355,010)
Gain on conversion of loan notes to equity		-	(2,221)
Impairment of available-for-sale assets and accrued interest	3	2,937,509	451,482
Employee salaries settled by issue of shares	14	-	300,000
Share-based payment charge	15	45,028	166,282
Amortized costs of convertible notes receivable	3	6,533	14,036
		(915,033)	(998,498)
Changes in working capital:
(Increase)/decrease in trade and other receivables	11	(18,856)	(80,252)
Decrease in trade and other payables	13	(20,022)	(36,609)
Net cash used by operating activities		(953,911)	(1,115,359)
Investing activities
Interest received	7	7,964	11,079
Purchase of available-for-sale assets	10	(1,561,762)	(4,370,612)
Proceeds from sale of available-for-sale assets		1,028,428	613,362
Net cash used by investing activities		(525,370)	(3,746,171)
Financing activities
Cash proceeds from issue of shares	14	-	4,258,331
Net cash from financing activities		-	4,258,331
Decrease in cash and cash equivalents		(1,479,281)	(603,199)
Cash and cash equivalents at the beginning of the year		2,639,070	3,242,269
Cash and cash equivalents at the end of the year	12	1,159,789	2,639,070

Statement of Changes in Equity

For the year ended 31 December 2014 and for year ended 31 December 2015, USD

		Share capital		Share-based payment reserve	Fair value reserve	Retained losses		Total
	Notes	USD		USD	USD	USD		USD
Balance at 1 January 2014		26,895,179		695,970	7,937,367	(3,177,084)		32,351,432
Total comprehensive income/(loss) for the year		-		-	2,171,251	(1,561,988)		609,263
Issue of shares	14	4,558,331		-	-	-		4,558,331
Buy back and cancellation of shares		-		-	-	-		-
Share-based payment charge	15	-		166,282	-	-		166,282
Lapse of share options	15	-		(469,593)	-	469,593		-
Balance at 31 December 2014		31,453,510		392,659	10,108,618	(4,269,479)		37,685,308
Total comprehensive income/(loss) for the year		-		-	18,505,974	(3,250,752)		15,255,222
Issue of shares	14	-		-	-	-		-
Share-based payment charge	15	-		45,028	-	-		45,028
Transfers on exercise / lapse of share options	15	-		(272,233)	-	272,233		-
Balance at 31 December 2015		31,453,510		165,454	28,614,592	(7,247,998)		52,985,558

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015

1.         Company information

TMT Investments Plc ("TMT" or the "Company") is a company incorporated in Jersey with its registered office at Queensway House, Hilgrove Street, St Helier, JE1 1ES, Channel Islands.

The Company was incorporated and registered on 30 September 2010 in Jersey under the Companies (Jersey) Law 1991 with registration number 106628 under the name TMT Investments Limited. The Company obtained consent from the Jersey Financial Services Commission pursuant to the Control of Borrowing (Jersey) Order 1985 on 30 September 2010. On 1 December 2010 the Company re-registered as a public company and changed its name to TMT Investments PLC.

The memorandum and articles of association of the Company do not restrict its activities and therefore it has unlimited legal capacity. The Company's ability to implement its Investing Policy and achieve its desired returns will be limited by its ability to identify and acquire suitable investments. Suitable investment opportunities may not always be readily available.

The Company will seek to make investments in any region of the world.

Financial statements of the Company are prepared by and approved by the Directors in accordance with International Financial Reporting Standards, International Accounting Standards and their interpretations issued or adopted by the International Accounting Standards Board as adopted by the European Union ("IFRSs"). The Company's accounting reference date is 31 December.

2.         Summary of significant accounting policies

2.1      Basis of presentation

The principal accounting policies applied by the Company in the preparation of these financial statements are set out below and have been applied consistently.

The financial statements have been prepared on a going concern basis, under the historical cost basis as modified by the fair value of available-for-sale financial assets, as explained in the accounting policies below, and in accordance with IFRS. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

2.2      Going concern

The Directors confirm that, after giving due consideration to the financial position and expected cash flows of the Company; they have a reasonable expectation that the Company will have adequate cash resources to continue in operational existence for the foreseeable future, and for at least one year from the date of approval of these financial statements and they have therefore adopted the going concern basis in preparing the financial statements.

2.3      Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker who is responsible for allocating resources and assessing performance of the operating segments and which has been identified as the Board of Directors that make strategic decisions. For the purposes of IFRS 8 'Operating Segments' the Company currently has one segment, being 'Investing in the TMT sector'.

Even though the Company only has one segment, there are still geographical disclosures that need to be made to comply with IFRS 8 'Operating Segments'.

The Company analyses revenue and non-current financial assets according to the geographical location of the investment (see note 4).

2.4      Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of the Company are measured in United States Dollars ('US dollars', 'USD' or 'US$'), which is the Company's functional and presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into US$ using the exchange rates prevailing at the dates of the transactions. Exchange differences arising from the translation at the year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.

Conversation rates, USD
Currency					At 31.12.2015	Average rate, 2015
British pounds, £					1.4819	1.5262
Euro, €					1.0934	1.0167

2.5      Cash and cash equivalents

Cash and cash equivalents consist of cash at bank and in hand, deposits held at call with banks, bank overdrafts and other short-term highly liquid investments with maturities of three months or less from the date of acquisition.

2.6      Financial assets

Recognition and measurement

Investments are recognized and de-recognized on a date where the purchase or sale of an investment is under a contract whose terms require the delivery or settlement of the investment. The Company manages its investments with a view to profiting from the receipt of dividends and changes in fair value of equity investments.

"Available-for-sale" financial instruments include unlisted equity investments and convertible promissory loan notes. Equity instruments classified as available-for-sale are those which are neither classified as held-for-trading nor designated as fair value through profit or loss. Convertible promissory loan notes are treated as similar in nature to the unlisted equity investments and designated as available-for-sale.

Available-for-sale investments are carried at fair values except for financial assets that do not have a quoted market price in an active market and whose fair value cannot be reliably measured which are measured at cost less any identified impairment losses at the end of the period in accordance with the IAS 39 para 46 (c) exemptions. Fair value information has therefore not been disclosed for those investments.

Where there has been a relevant transaction during the year that gives an indication of the fair value of the available-for-sale unlisted shares, the shares are included at that fair value and the increase or decrease in fair value is recognised in the investment fair value reserve. The "price of recent investment" methodology is used mainly for investments in venture capital companies and includes cost of investment or valuation by reference to a subsequent financing round. Valuation increases above cost are only recognised if that round involved a new external investor and the company is meeting milestones set by investors.

Investments are classified on recognition as "fair value through profit and loss" when their fair values can be estimated reliably on a regular basis and when they are managed on a fair value basis. Fair value changes of investments at fair value through profit and loss are included within profit/loss in the income statement. At 31 December 2015 all investments are classified as "available-for-sale" and none are classified as "fair value through profit and loss".

Financial assets that qualify as an associate as 20% or more of the voting rights are held by the company, are exempt from IAS 28 'Investments in Associates', as TMT Investments plc is a venture capital organisation. Such investments are therefore treated as available-for-sale financial assets.

Income

Interest income from convertible notes receivable is recognized as it accrues by reference to the principal outstanding and the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash flows through the expected life of the financial asset to the asset's carrying value.

Impairment of available-for-sale financial assets

A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. In the case of available for sale assets, a significant or prolonged decline in the fair value of the financial asset below its cost is considered an indicator that the financial assets are impaired.

If objective evidence indicates that financial assets that are carried at cost need to be tested for impairment, calculations are based on information derived from business plans and other information available for estimating their fair value. Any impairment loss is included in profit/loss for the year in the Statement of Comprehensive Income.

2.7      Net finance income

Net finance income comprises interest income on deposits. Interest income is recognized as it accrues in the statement of comprehensive income, using the effective interest method. Finance costs comprise interest expenses on borrowings and the unwinding of the discount on provisions.

2.8      Taxation

Deferred tax is provided in full using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates that are expected to apply when the related deferred tax asset is realised or when the deferred tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.

2.9      Equity instruments

Ordinary shares are classified as equity. Costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds.

2.10    Share-based payments

The fair value of options granted to employees is recognized as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options. The amount recognized as an expense is adjusted to reflect the actual number of share options that vest. For equity settled share-based payment transactions other than transactions with employees the Company measures the goods or services received at their fair value, unless that fair value cannot be estimated reliably. If this is the case the Company measures their fair values and the corresponding increase in equity, indirectly, by reference to the fair value of equity instruments granted.

The Company enters into arrangements that are equity-settled share-based payments with certain employees. These are measured at fair value at the date of grant, which is then recognized in the statement of comprehensive income on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest. Fair value is measured by use of an appropriate model. In valuing equity-settled transactions, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of TMT Investments. The charge is adjusted at each year end date to reflect the actual number of forfeitures, cancellations and leavers during the period. The movement in cumulative charges since the previous year end is recognized in the statement of comprehensive income, with a corresponding entry in equity.

2.11    New IFRSs and interpretations not applied

The IASB has issued the following standards and interpretations which have been endorsed by the European Union to be applied to financial statements with periods commencing on or after the following dates:

		Effective for period    beginning on or after
IFRS 9	Financial Instruments	1 January 2018
IFRS 15	Revenue from Contracts with Customers	1 January 2017

The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the financial statements in the period of initial application and have decided not to adopt any of them early.

2.12    Accounting estimates and judgements

Estimates and judgements need to be regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The estimates significant to the financial statements during the year and at the year-end is the consideration of the fair value of available-for-sale assets, the impairment of available-for-sale assets and share-based payment calculations, as set out in the relevant accounting policies shown above.  A number of the available-for-sale financial assets held by the Company are at an early stage of their development. The Company cannot yet carry out regular reliable fair value estimates of some of these investments. Future events or transactions involving the companies invested in may result in more accurate valuations of their fair values (either upwards or downwards) which may affect the Company's overall net asset value. 

3          Losses on investments

	For the year ended 31/12/2015		For the year ended 31/12/2014
	USD		USD
Gross interest income from convertible notes receivable	82,672		86,597
Amortized costs of convertible notes receivable	(6,533)		(14,036)
Net interest income from convertible notes receivable	76,139		72,561
Profit on disposal of equity investments	645,387		251,388
Profit on disposal of convertible notes	-		103,622
Impairment of available-for-sale assets	(2,937,509)		(451,482)
Total net losses on investments	(2,215,983)		(23,911)

4          Segmental analysis

Geographic information

The Company has investments in six principal geographical areas - USA, Israel, BVI, Cyprus, Estonia and Russia.

Non-current financial assets

As at 31/12/2015

	USA	Israel	BVI	Cyprus	Estonia	Russia	Total
	USD	USD	USD	USD	USD	USD	USD
Equity investments	45,507,167	2,973,369	305,050	465,921	173,254	59,096	49,483,857
Convertible notes	2,202,649	-	-	-	-	-	2,202,649
Total	47,709,816	2,973,369	305,050	465,921	173,254	59,096	51,686,506

As at 31/12/2014

	USA	Israel	BVI	Cyprus	Estonia	Russia	Total
	USD	USD	USD	USD	USD	USD	USD
Equity investments	25,490,710	3,806,652	305,050	1,863,685	328,958	59,096	31,854,151
Convertible notes	2,954,852	-	-	-	136,850	-	3,091,702
Total	28,445,562	3,806,652	305,050	1,863,685	465,808	59,096	34,945,853

5          Administrative expenses

Administrative expenses include the following amounts:

	For the year ended 31/12/2015		For the year ended 31/12/2014
	USD		USD
Staff expenses (note 6)	595,511		796,309
Professional fees	128,583		173,963
Legal fees	26,342		27,266
Bank and LSE charges	20,577		24,412
Audit and accounting fees	43,489		49,837
Rent	91,384		172,608
Other expenses	83,108		119,717
Currency exchange loss	8,711		18,762
	997,705		1,382,874

6          Staff expenses

	For the year ended 31/12/2015		For the year ended 31/12/2014
	USD		USD
Directors' fees	199,031		356,269
Wages and salaries	396,480		440,040
	595,511		796,309

Wages and salaries shown above include salaries and bonuses relating to 2015. These costs are included in administrative expenses. In addition to the above, there are employment expenses for share-based payments of US$45,028 (for the year ended 31 December 2014: US$166,282).

The average number of staff employed (excluding Directors) by the Company during the year was 5 (2014: 5).

The Directors' fees for 2015 were as follows:

	For the year ended 31/12/2015		For the year ended 31/12/2014
	USD		USD
Alexander Selegenev	108,475		186,826
Yuri Mostovoy	50,000		115,500
James Joseph Mullins	30,556		32,912
Petr Lanin	10,000		21,031
	199,031		356,269

The Directors' fees shown above are all classified as 'short term employment benefits' under International Accounting Standard 24. The Directors do not receive any pension contributions or other benefits.

Key management personnel of the Company are defined as those persons having authority and responsibility for the planning, directing and controlling the activities of the Company, directly or indirectly. Key management of the Company are therefore considered to be the Directors of the Company. There were no transactions with the key management, other than their Directors fees and share options.

7       Net finance income

	For the year ended 31/12/2015		For the year ended 31/12/2014
	USD		USD
Interest income	7,964		11,079
	7,964		11,079

8       Income tax expense

	For the year ended 31/12/2015		For the year ended 31/12/2014
	USD		USD
Current taxes
Current year	-		-
Deferred taxes
Deferred income taxes	-		-
	-		-

The Company is incorporated in Jersey. No tax reconciliation note has been presented as the income tax rate for Jersey companies is 0%.

9       Loss per share

The calculation of basic loss per share is based upon the net loss for the year ended 31 December 2015 attributable to the ordinary shareholders of US$3,258,716 (2014: net loss of US$1,561,988) and the weighted average number of ordinary shares outstanding calculated as follows:

Loss per share	For the year ended 31/12/2015		For the year ended 31/12/2014
Basic loss per share (cents per share)	(11.75)		(5.96)
Loss attributable to equity holders of the entity	(3,258,716)		(1,561,988)

The weighted average number of ordinary shares outstanding before and after adjustment for the effects of all dilutive potential ordinary shares calculated as follows:

(in number of shares weighted during the year outstanding)	For the year ended 31/12/2015		For the year ended 31/12/2014
Weighted average number of shares in issue
Ordinary shares	27,744,962		26,199,590
	27,744,962		26,199,590
Effect of dilutive potential ordinary shares
Share options	(21,099)		1,004,720
Weighted average of shares for the year (fully diluted)	27,723,863		27,204,310

The diluted loss per share for both 2015 and 2014 is kept the same as the basic loss per share because the conversion of the share options decreases the basic loss per share and is therefore anti-dilutive.

10     Non-current financial assets

	At 31 December 2015		At 31 December 2014
Available-for-sale financial assets, USD:
Investments in equity shares (i)
- unlisted shares	49,483,857		31,854,151
Convertible notes receivable (ii)
- promissory notes	2,202,649		3,091,702
	51,686,506		34,945,853

Reconciliation of fair value measurements of non-current financial assets:

		Available-for-sale				Total
		Unlisted shares		Convertible notes
		USD		USD		USD
Balance as at 1 January 2014		26,932,335		2,193,304		29,125,639
Total gains or losses in 2014:
- in profit or loss - impairment		(451,482)		-		(451,482)
- in other comprehensive income		2,171,251		-		2,171,251
Purchases (including consulting & legal fees)		3,074,752		1,295,860		4,370,612
Disposal of investment (carrying value)		(258,352)		(14,036)		(272,388)
Conversion of notes to equity and net gain		385,647		(383,426)		2,221
Balance as at 31 December 2014		31,854,151		3,091,702		34,945,853
Total gains or losses in 2015:
- in profit or loss - impairment		(2,292,123)		-		(2,292,123)
- in other comprehensive income		18,505,974		-		18,505,974
Purchases (including consulting & legal fees)		1,060,745		501,018		1,561,763
Disposal of investment (carrying value)		(1,028,428)		(6,533)		(1,034,961)
Conversion and other movements		1,383,538		(1,383,538)		-
Balance as at 31 December 2015		49,483,857		2,202,649		51,686,506

Available-for-sale investments are carried at fair values. Where financial assets do not have a quoted market price in an active market and their fair values cannot be reliably measured they are measured at cost less any identified impairment losses at the end of reporting period, in accordance with IAS 39 para 46 (c) exemption.

Where there has been a relevant transaction during the year that gives an indication of the fair value of the unlisted shares, the shares are included at that fair value and the increase or decrease in fair value is recognised in the fair value reserve. The "price of recent investment" methodology is used mainly for investments in venture capital companies and includes cost of investment or valuation by reference to a subsequent financing round. Valuation increases above cost are only recognised if that round involved a new external investor and the company is meeting milestones set by investor.

(i)            Equity investments as at 31 December 2015:

Investee company	Date of initial investment	Value at 1 Jan 2015, USD	Additions to equity investments during the period, USD	Conversions from loan notes, USD	Gain/loss from changes in fair value of equity investments, USD	Profit/ Impairment charge, USD	Disposals, USD	Value at 31 Dec 2015, USD	Equity stake owned
Unicell	15.09.2011	2,982,471	-	-	-	(1,527,383)	-	1,455,088	10.00%
DepositPhotos	26.07.2011	4,997,285	999,995	-	8,121,753	-	-	14,119,033	23.85%
RollApp	19.08.2011	600,000	-	-	-	-	-	600,000	10.00%
Wanelo	21.11.2011	5,369,400	-	-	-	-	-	5,369,400	4.73%
Gild	05.12.2011	549,345	-	-	-	-	-	549,345	1.04%
ThusFresh	26.03.2012	379,355	-	-	-	-	-	379,355	3.53%
Backblaze	24.07.2012	6,225,917	-	-	3,398,360	-	-	9,624,277	15.34%
UM Liquidating Trust	15.07.2014	29,273	-	-	-	-	-	29,273	5.89%
Gentoo LABS	15.05.2014	260,000	-	-	-	-	-	260,000	6.88%
Favim	24.10.2012	305,050	-	-	-	-	-	305,050	20.00%
AppsIndep	12.11.2012	1,863,685	-	-	-	(1,397,764)	-	465,921	19.24%
Virool	29.08.2012	502,275	-	-	1,311,576	-	-	1,813,851	1.42%
Adinch	19.02.2013	2,400,001	-	-	-	-	-	2,400,001	22.43%
Tracks	24.11.2011	341,350	-	-	-	456,179	(651,300)	146,229	0.00%
Wrike	12.06.2012	1,991,150	-	-	2,312,428	-	-	4,303,578	3.68%
Graphicly	03.04.2013	140,000	-	-	-	(12,362)	(127,638)	-	0.00%
Oriense	27.01.2014	59,096	-	-	-	-	-	59,096	5.45%
E2C	15.02.2014	136,781	-	-	-	-	-	136,781	5.51%
Drippler	01.05.2014	302,400	-	-	-	-	-	302,400	1.45%
Weaved	13.06.2014	255,000	-	-	-	-	-	255,000	2.44%
Le Tote	21.07.2014	450,360	-	-	618,518	-	-	1,068,878	1.35%
Anews	25.08.2014	1,000,000	-	-	-	-	-	1,000,000	9.41%
Twtrland	01.09.2014	155,000	-	-	-	-	-	155,000	3.27%
Drupe	02.09.2014	230,000	60,750	-	304,392	-	-	595,142	7.47%
Taxify	15.09.2014	328,958	-	-	-	-	-	328,958	2.80%
Pipedrive	30.07.2012	-	-	808,206	2,347,515	189,208	(249,490)	3,095,439	4.43%
Quoteroller	11.07.2014	-	-	409,912	83,596	-	-	493,508	2.17%
VitalFields	20.12.2013	-	-	165,420	7,834	-	-	173,254	2.23%
Total		31,854,151	1,060,745	1,383,538	18,505,974	(2,292,123)	(1,028,428)	49,483,857

(ii)           Convertible loan notes as at 31 December 2015:

Investee company	Date of initial investment	Value at 1 Jan 2015, USD	Additions to convertible note investments during the period, USD	Capitalized consulting and legal fees, USD	Amortized costs, USD	Internal movements, USD	Profit on disposal/ Impairment charge, USD	Disposals, USD	Value at 31 Dec 2015, USD	Term, years	Interest rate, %
Ninua	08/06/2011	500,000	-	-	-	-	-	-	500,000	1.5	5.00%
Pipedrive	30/07/2012	775,352	33,026	-	(172)	(808,206)	-	-	-	-
Sharethis	26/03/2013	571,323	-	-	(399)	-	-	-	570,924	5.0	1.09%
KitApps	10/07/2013	400,339	-	-	(292)	-	-	-	400,047	1.0	2.00%
VitalFields	20/12/2013	136,850	28,570	-	-	(165,420)	-	-	-	-
Gentoo LABS	21/05/2014	100,475	-	-	(342)	-	-	-	100,133	2.0	0.28%
Whale Path	02/06/2014	203,548	-	-	(2,493)	-	-	-	201,055	2.0	5.00%
Quoteroller	11/07/2014	403,815	7,145	-	(1,048)	(409,912)	-	-	-	-
ScentBird	13.04.2015	-	400,000	5,000	(1,788)	-	-	-	403,212	2.0	4.00%
Weaved	05.10.2015	-	27,277	-	-	-	-	-	27,277	1.0	7.70%
Total		3,091,702	496,018	5,000	(6,533)	(1,383,538)	-	-	2,202,649

11     Trade and other receivables

	At 31 December 2015		At 31 December 2014
	USD		USD
Prepayments	15,174		6,438
Interest receivable on promissory notes	163,165		152,528
Interest receivable on deposits	301		818
	178,640		159,784

12     Cash and cash equivalents

The cash and cash equivalents as at 31 December 2015 include cash on hand and in banks and deposits, net of outstanding bank overdrafts. The effective interest rate at 31 December 2015 was 0.7%.

Cash and cash equivalents comprise the following:

	At 31 December 2015		At 31 December 2014
	USD		USD
Deposits	500,000		1,000,000
Bank balances	659,789		1,639,070
	1,159,789		2,639,070

The following table represents an analysis of cash and equivalents by rating agency designation based on Fitch rating or their equivalent:

	At 31 December 2015		At 31 December 2014
	USD		USD
Bank balances
A rating	659,789		1,639,070
	659,789		1,639,070
Deposits
A rating	500,000		1,000,000
	500,000		1,000,000
	1,159,789		2,639,070

13     Trade and other payables

	At 31 December 2015		At 31 December 2014
	USD		USD
Directors' fees payable	7,471		23,902
Trade payables	6,992		34,874
Other current liabilities	92		623
Accrued expenses	24,822		-
	39,377		59,399

14     Share capital

On 31 December 2015 the Company had an authorised share capital of unlimited shares of no par value and had issued share capital of:

	At 31 December 2015		At 31 December 2014
	USD		USD
Share capital	31,453,510		31,453,510
Issued capital comprises:	Number		Number
Fully paid ordinary shares	27,744,962		27,744,962
	Number of shares		Share capital, USD
Balance at 31 December 2014	27,744,962		31,453,510
Issue of shares	-		-
Share buy-back and cancellation	-		-
Balance at 31 December 2015	27,744,962		31,453,510

There have been no changes to the Company's share capital between the year-end date and the date of approval of these financial statements.

15     Share-based payments

	For the year ended 31/12/2015		For the year ended 31/12/2014
	USD		USD
Share option (compensation expense)	45,028		166,282
Total share-based payment charge	45,028		166,282

On 24 October 2012, the Board of Directors approved a share option plan (the "Plan") for directors, officers, employees of or consultants to the Company and/or any company directly or indirectly controlled by the Company.

Under the Plan, options for a total of 7,500,000 ordinary shares in the Company, representing approximately 30% of the then issued share capital (or 23% of the enlarged share capital at the time, assuming full exercise of the options), could be made available at an exercise price determined by the Board or its remuneration committee, which would not be less than the closing middle market price for the Company's share on AIM on the date of grant as published by or on behalf of the London Stock Exchange plc.

Options were to vest on a daily basis over a period of 3 years whilst the option holder remains eligible, and vested options could be exercised on each anniversary of the grant, but if not exercised within 1 year from the allowable date of exercise, would lapse.

The following options, without performance conditions, have been granted under the Plan on 24 October 2012:

Name	Option Shares		Option Price Year 1		Option Price Year 2		Option Price Year 3
German Kaplun (Employee)	1,125,000		US$1.40		US$1.55		US$1.70
Alexander Morgulchik (Employee)	1,125,000		US$1.40		US$1.55		US$1.70
Alexander Selegenev (Director)	1,125,000		US$1.40		US$1.55		US$1.70
Artyom Inyutin (Employee)	1,125,000		US$1.40		US$1.55		US$1.70
Yuri Mostovoy (Director)	562,500		US$1.40		US$1.55		US$1.70
Alexander Pak (Employee)	300,000		US$1.40		US$1.55		US$1.70
Levan Kavtaradze (Employee)	150,000		US$1.40		US$1.55		US$1.70
TOTAL	5,512,500

The fair value of services received in return for share options granted is based on the fair value of share options and warrants granted, measured using the Black-Scholes formula, using the following assumptions:

(in USD, except for number of shares and percent)			Option Price Year 1		Option Price Year 2		Option Price Year 3
Number of share options granted			1,837,500		1,837,500		1,837,500
Fair value of share option at date of grant			0.25		0.15		0.09
Share price at date of grant			1.65		1.65		1.65
Exercise price			1.40		1.55		1.70
Expected volatility, per cent			9.39%		9.39%		9.39%
Option life, years			0-1		0-2		0-3
Expected dividends, percent			0		0		0
Risk free interest rate, percent			0.41%		0.41%		0.41%

Expected volatility is estimated from the Company's share price performance on AIM.

	Number of shares		Weighted average exercise price of share options
Outstanding share options at 31 December 2014	3,675,000		1.63
Options exercised during the year ended 31 December 2015	-		0.00
Options expired during the year ended 31 December 2015	(1,837,500)		1.55
Outstanding share options at 31 December 2015	1,837,500		1.70
Exercisable share options at 31 December 2015	1,837,500		1.70

None of the options that vested in Year 2 under the Plan were exercised, and those options have now lapsed.

16        Reserves

	Share-based payment reserve USD	Fair value reserve USD	Retained losses USD	Total USD
Balance as at 1 January 2014	695,970	7,937,367	(3,177,084)	5,456,253
Loss for the year	-	-	(1,561,988)	(1,561,988)
Gain from changes in fair value	-	2,171,251	-	2,171,251
Share-based payment charge	166,282	-	-	166,282
Transfer on lapse of share options	(469,593)	-	469,593	-
Balance as at 31 December 2014	392,659	10,108,618	(4,269,479)	6,231,798
Loss for the year	-	-	(3,250,752)	(3,250,752)
Gain from changes in fair value	-	18,505,974	-	18,505,974
Share-based payment charge	45,028	-	-	45,028
Transfer on exercise of share options	(272,233)	-	272,233	-
Balance as at 31 December 2015	165,454	28,614,592	(7,247,998)	21,532,048

17        Capital management

The capital structure of the Company consists of equity share capital, reserves, and retained losses.

The Board's policy is to maintain a strong capital base so as to maintain investor and market confidence and to enable the successful future development of the business.

The Company is not subject to externally imposed capital requirements.

No changes were made to the objectives, policies and process for managing capital during the year.

18     Financial risk management and financial instruments

The Company has identified the following risks arising from its activities and has established policies and procedures to manage these risks. The Company's principal financial assets are cash and cash equivalents, investments in equity shares, and convertible notes receivable.

Credit risk

As at 31 December 2015 the largest exposure to credit risk related to cash and cash equivalents, which was US$1,159,789. The exposure risk is reduced because the counterparties are banks with high credit ratings ("A" Liquidity banks) assigned by international credit rating agencies. The Directors intend to continue to spread the risk by holding the Company's cash reserves in more than one financial institution.

(i) Exposure to credit risk

The carrying amount of the following assets represents the maximum credit exposure. The maximum exposure to credit risk as at 31 December is as follows:

	At 31 December 2015		At 31 December 2014
	USD		USD
Convertible notes receivable	2,202,649		3,091,702
Trade and other receivables	178,640		159,784
Cash and cash equivalents	1,159,789		2,639,070
	3,541,078		5,890,556

Market risk

The Company's financial assets are classified as available-for-sale and are measured at fair value. The measurement of the Company's investments in equity shares and convertible notes is largely dependent on the underlying trading performance of the investee companies, but the valuation and other items in the financial statements can also be affected by the interest rate and fluctuations in the exchange rate.

Interest rate risk

Changes in interest rates impact primarily cash and cash equivalents by changing either their fair value (fixed rate deposits) or their future cash flows (variable rate deposits). Management does not have a formal policy of determining how much of the Company's exposure should be to fixed or variable rates.

At 31 December 2015 the Company had a cash deposit of US$ 500,000, earning a variable rate of interest. The Board of Directors monitors the interest rates available in the market to ensure that returns are maximized.

Foreign currency risk management

The Company is exposed to foreign currency risks on investments and salary and director remuneration payments that are denominated in a currency other than the functional currency of the Company. The currency giving rise to this risk is primarily GBP, EUR. The exposure to foreign currency risk as at 31 December 2015 was as follows:

		For the year ended 31/12/2015	For the year ended 31/12/2015	For the year ended 31/12/2014	For the year ended 31/12/2014
		GBP	EUR	GBP	EUR
Current assets
Cash and cash equivalents		106,694	8,468	207,618	12,026
Current liabilities
Trade and other payables		(31,376)	-	(40,022)	-
Net (short) long position		75,318	8,468	167,596	12,026
Net exposure currency		50,824	7,744	107,647	9,888
Net exposure currency (assuming a 10% movement in exchange rates)		67,786	7,621	150,836	10,823
Impact on exchange movements in the statement of comprehensive income		7,532	847	16,760	1,203

The foreign exchange rates of the USD at 31 December were as follows:

			31/12/2015		31/12/2014
Currency
British pounds, £			1.4819		1.5569
Euro, €			1.0934		1.2162
Israeli New Shekel, ILS			0.2566		0.2569

This analysis assumes that all other variables, in particular interest rates, remain constant.

Liquidity risk management

The Company's approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company.

The Company has low liquidity risk due to maintaining adequate banking facilities, by continuously monitoring actual cash flows and by matching the maturity profiles of financial assets and current liabilities.

As at 31 December 2015, the cash and equivalents of the Company were US$1,159,789.

The following are the maturities of current liabilities as at 31 December 2015:

	Carrying amount		Within one year		2-5 years		More than 5 years
	USD		USD		USD		USD
Directors' fees payable	7,471		7,471		-		-
Trade payables	6,992		6,992		-		-
Other current liabilities	24,914		24,914		-		-
	39,377		39,377		-		-

19     Related party transactions

Since May 2012, TMT's Moscow-based staff have been located in an office that belongs to a company ("Orgtekhnika") controlled by Mr. Alexander Morgulchik and Mr. German Kaplun, who collectively own 22.12% of the issued share capital of TMT and are thus considered related parties. There are currently 5 TMT staff involved working substantially full time on TMT's business. TMT started paying rent from 1 October 2012. Rent was being paid to Orgtekhnika at the rate of US$700 per sq meter per year of space utilised. The board believes this represented a discount from the prevailing market rate for similar office space in Moscow at the time. Together with other related expenses (support personnel, company car, security services, etc.), the total costs to TMT were US$14,384 per month (US$172,608 per year). Following the recent negative developments in the Russian economy and Moscow office rental market in particular, starting from 1 February 2015 these office costs have been reduced to US$7,000 per month, and from 1 February 2016 temporarily reduced to zero.

20     Subsequent events

There were no material events subsequent to the end of the reporting period.

21     Control

The Company is not controlled by any one party. Details of significant shareholders are shown in the Directors' Report.

 

END

 

 

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